9911796707
TMI Blog2021 (3) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee by giving portion of the property on rent and had rightly concluded that the assessee had correctly shown the said income under the head income from house property as the assessee had fulfilled all the basis conditions of Section 22 of the Act for treating the income under the head income from house property , therefore, it was rightly held that the assessee was also entitled for deduction U/s 24(a) and 24(b) of the Act. No new facts or circumstances have been brought before us in order to rebut or controvert the findings so recoded by the ld. CIT(A). Therefore, we find no reasons to interfere into or deviate from the findings recorded by the ld. CIT(A). Hence, these grounds raised by the revenue stand dismissed and the order passed by the ld. CIT(A) qua these issues stand affirmed. N.P. on declared sales - Assessee excluded the rent receipts from the net profit - HELD THAT:- In NP rate chart the NP has been shown at 77,23,674/- which includes rent receipts. However, in the above chart which has now been filed by the assessee which excludes the rent receipt from the net profit claimed by the assessee. Thus, in our view, the assessee had rightly excluded the rent rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's appeal in ITA No. 1311/JP/2019 " 1. Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in holding the income received on leasing of land and building to be assessed under the head 'income from house property' and consequently allowing the deduction U/s 24 of the I.T. Act, 1961 ignoring the facts of the case that the land in question was allotted to the assessee on concessional rate for specific purpose of public interest and terms and conditions. There was a prohibition of further renting it public interest and terms and conditions. There was a prohibition on further renting it out. 2. Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in holding the income received on leasing of land and building under the head 'income from house property' and consequently allowing the deduction u/s 24 of the I.T. Act, 1961 ignoring the facts of the case that the assessee flouted all the terms and conditions of numerous authorities just to reap benefits. As per the norms of allotment the total area to be sublet was not to exceed 40% of the total built up area, while the assessee had rented out area is 47.57% of tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has been considered carefully but the same is not acceptable. Vide notification No. 3(63) 4D/3/2005 dated 05/08/2007 of the Urban Development & Housing Department subletting of the premises by news papers was allowed on fulfillment of certain conditions such as: (i) registration of newspaper should be older than 30 years and is regularly published in Rajasthan which is not the case with this news paper. (ii) the total area sublet by an institution would not exceed 40% of the total built-up area vide submission dated 17/11/2017 the assessee has rented out 46.4% of the total built up area, thus clearly contravening provisions of above said notification. Further, there is an incorrect figure in calculation of 46.60% as rented area to FIITZee Ltd. is wrongly taken at 20000 sqr.feet in place of correct figure 20500 sqr feet as per the lease deed dated 12/03/2010, thus the actual rented out area is 47.57%. (iii) institution will be required to seek prior permission of JDA/UIT for any type of subletting, it has been observed no prior permission was sought. Therefore, from the above discussion, it is clear that the assessee flouted all the terms and conditions of numerous auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 145 was not taken by the Ld. AO. As such books of accounts was not rejected as provided u/s. 145. 4. Further submitted due to instruction No. 8 of 2017 dated 29.09.2017 issued by CBDT for conducting assessment proceedings the Ld. AO vide letter No. ITBA/Com/F/17/2017-18/1006681108(1) dated 05.10.2017 has informed the assessee to intimate her intention to participate in assessment proceedings electronically. The assessee has filed his intention to pass the assessment order electronically. The Ld. AO in spite of request to finalized assessment proceedings electronically has completed assessment proceedings manually, as such the Ld. AO has not followed the direction as per direction issued by CBDT. As such in the circumstances assessment order has been finalized against the direction of CBDT and assessment order deserved to be quashed. In the case of Sunita Finlease Ltd. Vs. DCIT (2008) 8 DTR 183 (Bilaspur ITAT), it has been held as under: "Scrutiny of the case having been done in violation of CBDT Instructions No. 9/2004 dated 20th Sep., 2004, AO erred in assuming jurisdiction and completing the assessment under s. 144". 5. As per assessment order the Ld. AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business". In the case of New Paris Complex vs. ACIT (2004) 89 TTJ 684 (Coch.), it has been held as under: "Since the assessee-firm was carrying on the business of constructing and running shopping complex-cum-lodging house and not the business of banking, rent received by it by letting out a functionally independent portion of a building to a bank was assessable as income from house property". vi) As such looking to above facts the Ld. AO is totally unjustified to treat the income from house property as income from other sources and also unjustified in not allowing standard deduction u/s. 24 of ₹ 3335135/-. 6. We have considered the rival submissions and carefully perused the material placed on record. After appreciating the facts of the present case, we noticed that the assessee had given building at 3A, D.L. Tower, Vidhya Ashram Institutional Area, JLN Marg, Jaipur on lease to FIITJEE on a monthly rent of ₹ 6,29,207/-. The assessee had disclosed the above income under the head income from house property and also claimed interest expenses of ₹ 21,42,598/- U/s 24 of the Act. From the facts of the case, we further noticed that the A.O. treated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. has failed to pin point any violation of any condition regarding chargeability of income under the head "income from house property". Therefore, in our view, the A.O. was not competent to treat the income earned by the assessee from rentals to be considered under the head "income from other sources". More particularly when the assessee had fulfilled all basic conditions for treating the income under the head "income from house property" as enumerated in Section 22 of the Act. We have also meticulously gone through the orders passed by the revenue authorities and we found that the ld. CIT(A) while dealing with these amounts have elaborately discussed the provisions of Section 22 of the Act and the ingredients contained therein for treating the income earned by the assessee by giving portion of the property on rent and had rightly concluded that the assessee had correctly shown the said income under the head "income from house property" as the assessee had fulfilled all the basis conditions of Section 22 of the Act for treating the income under the head "income from house property", therefore, it was rightly held that the assessee was also entitled for deduction U/s 24(a) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds to be added back to the total income." 8. On the other hand, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) which are contained at para No. 3.2.1 of the order of ld. CIT(A) and the same are reproduced below: "3.2.1 Submission made by the appellant 7. Submission against addition of ₹ 2,40,02,905/-: i) That the trading results as per books of accounts are as under: Particulars Asstt. Year 2013-14 Asstt. Year 2014-15 Asstt. Year 2015-16 Sales 54,159,849.00 38,616,717.00 69,664,917.00 Gross Profit 7,083,939.00 14,733,205.00 11,768,745.00 Gross Profit rate 18.34% 21.15% 21.73% Net Profit 52,40,717.00 1,00,10,234.00 77,23,674.00 Net Profit Rate 13.57% 14.37% 14.2% As such looking to above chart GP rate in assessment year 2015-2016 was better in comparison to last years, hence trading addition is totally unjustified. In the case of ITO vs. Hitesh Kumar Panchori (2008) I DTR 17 (Jd. ITAT), it has been held as under: "GP Rate being better at 11.08 per cent as against 10.20 per cent in the immediately preceding year, no further addition can be made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT Vs. Pratap Singh, Amrosh Singh, Rajendra Singh (1993) 200 ITR 788 (Raj. SC), it has been held as under: "In respect of the investment which is made in the property there can be only two methods to find out the correct position (one, when proper books of accounts are maintained and two valuation report). If the assessee has maintained proper books of accounts and all details are mentioned in such books of account which are duly supported by vouchers and no defect are pointed out and the books are not rejected, the figures shown therein have to be followed. The valuation report can be taken into consideration only when the books of account are not reliable or are not supported by proper vouchers or the ITO is of the opinion, that no reliance can be placed on such books of account. It is to that the /TO has no option, but to rely on the valuation report which is a documents prepared by an expert and is admissible, but there must be a finding by the /TO that the books maintained by assessee are defective or not reliable". 9. The assessee has filed circulation certificate with RNI on estimate basis and on higher side since the rate of advertisement is determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jpr.) (ITAT), it has been held as under: "When each and every details have been kept by the assessee, regular books of accounts are maintained and no defect was found by the AO, mere fall in GP rate could not been made basis for rejection of books and addition". 10. Even otherwise the Ld. AO has treated the entire sale of ₹ 2,40,02,905/- as income of the assessee from undisclosed sources. The action of the Ld. AO is totally unjustified and against the Act, since in the circumstances the Ld. AO is bound to make the addition on the basis of Net Profit rate (NP rate) declared by the assessee which is 14.20% during the year under appeal. 11. Original demand notice is enclosed. 12. Power of attorney is enclosed. As such looking to above facts your honour is requested to please accept the appeal as requested above & oblige." 9. Apart from this, the ld AR also relied upon the written submissions filed before us and submitted that while filing the written submissions, the N.P. rate chart was given at page No. 19. However, during the course of arguments, another separate and independent N.P. rate chart of last five years was also filed and it was submitted that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee @ 14.26% was considered for the purpose of additions. The ld. CIT(A) after considering the decisions of Hon'ble Madhya Pradesh High Court as well as Hon'ble Gujarat High Court had rightly concluded that only net profit can be taxed in case of mismatch in figure of turnover and benefit of expenditure is to be granted to the assessee. 11. We have also considered the G.P./N.P. chart submitted by the assessee for the last three years which is reproduced below: Particulars Asstt. Year 2013-14 Asstt. Year 2014-15 Asstt. Year 2015-16 Sales 38,616,717.00 69,664,917.00 54,159,849.00 Gross Profit 7,083,939.00 14,733,205.00 11,768,745.00 Gross Profit rate 18.34% 21.15% 21.73% Net Profit 52,40,717.00 1,00,10,234.00 77,23,674.00 Net Profit Rate 13.57% 14.37% 14.2% We found that the N.P. on declared sales was 14.26% during the year under consideration. The sales as per the circulation certificate was ₹ 6,65,10,000/- while the sales as per books was ₹ 4,58,79,595/-. Since the assessee had claimed discount on such @ 50% whereas the A.O. had estimated the discount @ 25% amounting to ₹ 1,66,27,500/-, therefore after g ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
